Realtor Coaching & Training: the Wall Street Journal
Homeowners at a crossroads....
When I post about anything that appears to be ‘doomy and gloomy’ about the real estate markets many agents are…frankly…a little pissed.
I understand why.
Remember, we sold real estate for years (and years) too. We are not one of the ‘real estate pretenders’ who is trying to coach you to sell real estate…never having sold real estate themselves.We have walked in your shoes, we know exactly what you are experiencing. We know what its like to be a Realtor selling in a tough market.
We know the impact that negative housing reports can have on home sales. At the end of the day home sales are emotional and people need to ‘feel’ good to be in a home buying mood.
We DO get it.
With that said, nearly 40,000 Realtors are participating in a HREU Coaching program everyday. Our focus has to be on what is best for fellow Realtors even if that results in ‘doomy and gloomy’ blog posts. We know that when we prepare you for the worst (and hope for the best) you will be prepared emotionally, financially and educationally for whats next.
When you are ready for whats next you can be excited and motivated. Its YOUR JOB as a business owner to be be prepared for what is around the corner.
This market is about agents who have the mindset of service and the skillset to serve. ™
Think of it this way…our Agent REO Secrets coaching students are actually excited reading information about the upcoming wave for foreclosures (and REO listings). They have learned how to become REO listing agents. This new breed of agents aren’t living in fear of the worsening market…they are actually looking forward to it.
Lets be clear, no one is celebrating the fact that so many people are suffering. We all look forward to brighter days when the housing markets have returned to something that resembles an equalibrium.
But, what will YOU do if that day is years and years away?
The very fundamentals of real estate have changed. What you must know has changed. What the buyers and sellers in your market require has changed. So, before you get angry that we are posting ‘doom and gloom’ ask yourself this simple question…’Have YOU changed?’.
If not, its not too late. Here is the article:
Due to the lifting of the foreclosure moratorium at the end of March, the downward slide in housing prices is gaining speed. The moratorium was initiated in January to give Obama’s anti-foreclosure program—which is a combination of mortgage modifications and refinancing—a chance to succeed. The goal of the plan was to keep up to 9 million struggling homeowners in their homes, but it’s clear now that the program will fall well-short of its objective.
In March, housing prices accelerated on the downside indicating bigger adjustments dead-ahead. Trend-lines are steeper now than ever before–nearly perpendicular. Housing prices are not falling, they’re crashing and crashing hard. Now that the foreclosure moratorium has ended, Notices of Default (NOD) have spiked to an all-time high. These Notices will turn into foreclosures in 4 to 5 months time creating another cascade of foreclosures. Market analysts predict there will be 5 MILLION MORE FORECLOSURES BETWEEN NOW AND 2011.
It’s a disaster bigger than Katrina.
Soaring unemployment and rising foreclosures ensure that hundreds of banks and financial institutions will be in BK. 40 percent of delinquent homeowners have already vacated their homes. There’s nothing Obama can do to make them stay. Worse still, only 30 percent of foreclosures have been relisted for sale suggesting more hanky-panky at the banks. Where have the houses gone? Have they simply vanished?
600,000 “DISAPPEARED HOMES?”
Here’s a excerpt from the SF Gate explaining the mystery:
“Lenders nationwide are sitting on 100s of 1000s of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.
“We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market,” said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures. “California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You’d have further depreciation and carnage.”
Realtors, learn how to become a REO Listing Agent. BE the agent with all of the buyer-baited REO listings. Watch the FREE Agent REO Secrets video and Grab your FREE Agent REO Secrets book.
In a recent study, RealtyTrac compared its database of bank-repossessed homes to MLS listings of listed homes four states, including California. It found a significant disparity – only 30 percent of the foreclosures were listed for sale in the mls. The remainder is known in the industry as “shadow inventory.” (”Banks aren’t Selling Many Foreclosed Homes” SF Gate)
If regulators were deployed to the banks that are keeping foreclosed homes off the market, they would probably find that the banks are actually servicing the mortgages on a monthly basis to conceal the extent of their losses. They’d also find that the banks are trying to keep housing prices artificially high to avoid heftier losses that would put them out of business. One thing is certain, 600,000 “disappeared” homes means that housing prices have a lot farther to fall and that an even larger segment of the banking system is underwater.
Here is more on the story from Mr. Mortgage “California Foreclosures About to Soar…Again”
“Are you ready to see the future? Ten’s of thousands of foreclosures are only 1-5 months away from hitting that will take total foreclosure counts back to all-time highs. This will flood an already beaten-bloody real estate market with even more supply just in time for the Spring/Summer home selling season…Foreclosure start (NOD) and Trustee Sale (NTS) notices are going out at levels not seen since mid 2008. Once an NTS goes out, the property is taken to the courthouse and auctioned within 21-45 days….The bottom line is that there is a massive wave of actual foreclosures that will hit beginning in April that can’t be stopped without a national moratorium.”
JP Morgan Chase, Wells Fargo and Fannie Mae have all stepped up their foreclosure activity in recent weeks. Delinquencies have skyrocketed foreshadowing more price-slashing into the foreseeable future. According to the Wall Street Journal:
“Ronald Temple, co-director of research at Lazard Asset Management, expects home prices to fall 22% to 27% from their January levels. More than 2.1 million homes will be lost this year because borrowers can’t meet their home payments, up from about 1.7 million in 2008.” (Ruth Simon, “The housing crisis is about to take center stage once again” Wall Street Journal)
Another 20 percent carved off the aggregate value of US housing means another $4 trillion loss to homeowners. That means smaller retirement savings, less discretionary spending, and lower living standards. The next leg down in housing will be excruciating; every sector will feel the pain. Obama’s $75 billion mortgage rescue plan is a mere pittance; it won’t reduce the principle on mortgages and it won’t stop the bleeding. Policymakers have decided they’ve done enough and are refusing to help. They don’t see the tsunami looming in front of them plain as day. The housing market is going under and it’s going to drag a good part of the broader economy along with it. Stocks, too
Source: ibankcoin.com
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Housing Bubble Part 2?
Talk about a double edge sword….sure, Realtors want the FHA to have more lenient lending standards so more people can qualify to buy a home. Makes sense. After all, we are in the business to help folks buy and sell homes.
Of course the other side is that Realtors are suffering from the housing crash in a very real and personal way. Not only has the real estate industry contracted (and incomes along with it) but, agents own homes have also lost value. Talk about a double whammy!
Now, the FHA may be following the a perilless path that could cause the national housing mess to languish.
Read this article from the Wall Street Journal, share your comments….
Everyone knows how loose mortgage underwriting led to the go-go days of multitrillion-dollar subprime lending. What isn’t well known is that a parallel subprime market has emerged over the past year — all made possible by the Federal Housing Administration. This also won’t end happily for taxpayers or the housing market.
Last year banks issued $180 billion of new mortgages insured by the FHA, which means they carry a 100% taxpayer guarantee. Many of these have the same characteristics as subprime loans: low downpayment requirements, high-risk borrowers, and in many cases shady mortgage originators. FHA now insures nearly one of every three new mortgages, up from 2% in 2006.
The financial results so far are not as dire as those created by the subprime frenzy of 2004-2007, but taxpayer losses are mounting on its $562 billion portfolio. According to Mortgage Bankers Association data, more than one in eight FHA loans is now delinquent — nearly triple the rate on conventional, nonsubprime loan portfolios. Another 7.5% of recent FHA loans are in “serious delinquency,” which means at least three months overdue.
The FHA is almost certainly going to need a taxpayer bailout in the months ahead. The only debate is how much it will cost. By law FHA must carry a 2% reserve (or a 50 to 1 leverage rate), and it is now 3% and falling. Some experts see bailout costs from $50 billion to $100 billion or more, depending on how long the recession lasts.
How did this happen? The FHA was created during the Depression to help moderate-income and first time homebuyers obtain a mortgage. However, as subprime lending took off, banks fled from the FHA and its business fell by almost 80%. Under the Bush Administration, the FHA then began a bizarre initiative to “regain its market share.” And beginning in 2007, the Bush FHA, Congress, the homebuilders and Realtors teamed up to expand the agency’s role.
The bill that passed last summer more than doubled the maximum loan amount that FHA can insure — to $719,000 from $362,500 in high-priced markets. Congress evidently believes that a moderate-income buyer can afford a $700,000 house. This increase in the loan amount was supposed to boost the housing market as subprime crashed and demand for homes plummeted. But FHA’s expansion has hardly arrested the housing market decline. The higher FHA loan ceiling was also supposed to be temporary, but this year Congress made it permanent.
Even more foolish has been the campaign to lower FHA downpayment requirements. When FHA opened in the 1930s, the downpayment minimum was 20%; it fell to 10% in the 1960s, and then 3% in 1978. Last year the Senate wisely insisted on raising the downpayment to 3.5%, but that is still far too low to reduce delinquencies in a falling market.
Because FHA also allows borrowers to finance closing costs and other fees as part of the mortgage, the purchaser’s equity can be very close to zero. With even a small drop in prices, many homeowners soon have mortgages larger than their home’s value — which is one reason FHA’s defaults are rising. Every study shows that by far the best way to reduce defaults and foreclosures is to increase downpayments. Banks know this and have returned to a 10% minimum downpayment on their non-FHA loans.
In a rational world, Congress and the White House would tighten FHA underwriting standards, in particular by eliminating the 100% guarantee. That guarantee means banks and mortgage lenders have no skin in the game; lenders collect the 2% to 3% origination fees on as many FHA loans as they can push out the door regardless of whether the borrower has a likelihood of repaying the mortgage. The Washington Post reported in March a near-tripling in the past year in the number of loans in which a borrower failed to make more than a single payment. One Florida bank, Great Country Mortgage of Coral Gables, had a 64% default rate on its FHA properties.
The Veterans Affairs housing program has a default rate about half that of FHA loans, mainly because the VA provides only a 50% maximum guarantee. If banks won’t take half the risk of nonpayment, this is a market test that the loan shouldn’t be made.
These reforms have long been blocked by the powerful housing lobby — Realtors, homebuilders and mortgage bankers, backed by their friends in Congress. They claim FHA makes money for taxpayers through the premiums it collects from homebuyers. But keep in mind these are the same folks who said taxpayers weren’t at risk with Fannie Mae and Freddie Mac.
A major lesson of Fan and Fred and the subprime fiasco is that no one benefits when we push families into homes they can’t afford. Yet that’s what Congress is doing once again as it relentlessly expands FHA lending with minimal oversight or taxpayer safeguards.
Popularity: 1% [?]
Waves Of Foreclosures Expected.
Due to the lifting of the foreclosure moratorium at the end of March, the downward slide in housing prices is gaining speed.
The moratorium was initiated in January to give Obama’s anti-foreclosure program—which is a combination of mortgage modifications and refinancing—a chance to succeed. The goal of the plan was to keep up to 9 million struggling homeowners in their homes, but it’s clear now that the program will fall well-short of its objective.
In March, housing prices accelerated on the downside indicating bigger adjustments dead-ahead. Trend-lines are steeper now than ever before–nearly perpendicular. Housing prices are not falling, they’re crashing and crashing hard. Now that the foreclosure moratorium has ended, Notices of Default (NOD) have spiked to an all-time high.
These Notices will turn into foreclosures in 4 to 5 months time creating another cascade of foreclosures. Market analysts predict there will be 5 MILLION MORE FORECLOSURES BETWEEN NOW AND 2011. It’s a disaster bigger than Katrina. Soaring unemployment and rising foreclosures ensure that hundreds of banks and financial institutions will be forced into bankruptcy. 40 percent of delinquent homeowners have already vacated their homes.
Realtors, learn NOW how-to become a REO Listing Agent. Cleary, REO agents are the agents with the best priced, buyer baited listings. Do not delay. Learn now exactly how-to become a REO Listing agent…watch the FREE Agent REO Secrets video and download the FREE Agent REO Secrets book.
There’s nothing Obama can do to make them stay. Worse still, only 30 percent of foreclosures have been relisted for sale suggesting more hanky-panky at the banks. Where have the houses gone? Have they simply vanished?
600,000 “DISAPPEARED HOMES?”
Here’s a excerpt from the SF Gate explaining the mystery:
“Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.
“We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market,” said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures. “California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You’d have further depreciation and carnage.”
Realtors, did you catch that last paragraph….clearly its time for you to learn how to become a REO listing agent. Watch the FREE Agent REO Secrets video and download the FREE Agent REO Secrets book NOW.
In a recent study, RealtyTrac compared its database of bank-repossessed homes to MLS listings of for-sale homes in four states, including California. It found a significant disparity – only 30 percent of the foreclosures were listed for sale in the Multiple Listing Service. The remainder is known in the industry as “shadow inventory.” (”Banks aren’t Selling Many Foreclosed Homes” SF Gate)
If regulators were deployed to the banks that are keeping foreclosed homes off the market, they would probably find that the banks are actually servicing the mortgages on a monthly basis to conceal the extent of their losses. They’d also find that the banks are trying to keep housing prices artificially high to avoid heftier losses that would put them out of business. One thing is certain, 600,000 “disappeared” homes means that housing prices have a lot farther to fall and that an even larger segment of the banking system is underwater.
Here is more on the story from Mr. Mortgage “California Foreclosures About to Soar…Again”
“Are you ready to see the future? Ten’s of thousands of foreclosures are only 1-5 months away from hitting that will take total foreclosure counts back to all-time highs. This will flood an already beaten-bloody real estate market with even more supply just in time for the Spring/Summer home selling season…Foreclosure start (NOD) and Trustee Sale (NTS) notices are going out at levels not seen since mid 2008. Once an NTS goes out, the property is taken to the courthouse and auctioned within 21-45 days….The bottom line is that there is a massive wave of actual foreclosures that will hit beginning in April that can’t be stopped without a national moratorium.”
JP Morgan Chase, Wells Fargo and Fannie Mae have all stepped up their foreclosure activity in recent weeks. Delinquencies have skyrocketed foreshadowing more price-slashing into the foreseeable future. According to the Wall Street Journal:
“Ronald Temple, co-director of research at Lazard Asset Management, expects home prices to fall 22% to 27% from their January levels. More than 2.1 million homes will be lost this year because borrowers can’t meet their loan payments, up from about 1.7 million in 2008.” (Ruth Simon, “The housing crisis is about to take center stage once again” Wall Street Journal)
Another 20 percent carved off the aggregate value of US housing means another $4 trillion loss to homeowners. That means smaller retirement savings, less discretionary spending, and lower living standards. The next leg down in housing will be excruciating; every sector will feel the pain. Obama’s $75 billion mortgage rescue plan is a mere pittance; it won’t reduce the principle on mortgages and it won’t stop the bleeding. Policymakers have decided they’ve done enough and are refusing to help. They don’t see the tsunami looming in front of them plain as day. The housing market is going under and it’s going to
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2009 Will be a BOOM MARKET for Realtor Coaching students who specialize in short sales and REOs…..this is an excellent report from The Wall Street Journal.
A survey showed that one in 10 American households with mortgages is overdue on payments or in foreclosure, adding pressure on Washington to provide more relief to distressed borrowers.
The Mortgage Bankers Association said its latest survey, released Friday, showed that 10% of mortgages on one- to four-family homes were at least a month overdue or in the foreclosure process in the third quarter. That is up from 9.2% three months earlier and 7.3% a year ago. The current level is the highest since the trade group began such surveys four decades ago.
For prime loans, 5.9% of loans were past due or in foreclosure in the latest quarter. For subprime loans, those for people with weak credit records or high debts in relation to income, the rate was about 33%.
The recent surge in unemployment is likely to push foreclosure and delinquency rates higher in 2009, said Jay Brinkmann, chief economist of the association. “We have not gone into past recessions with the housing market as weak as it is now,” he said.
![[mortgage]](http://s.wsj.net/public/resources/images/OB-CT934_MBAloa_NS_20081205173857.gif "Realtor REO and Short Sale Coaching and Training | 2009 Real Estate Market Predictions | How To List REOs")
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Ed McMahon, Johnny Carson’s sidekick on “The Tonight Show” for three decades, may lose his home to foreclosure. Ed’s home has been up for sale for two years.
A default notice for $643,596 was filed against the 85-year- old McMahon by ReconTrust Co., a unit of Countrywide Financial Corp., the biggest U.S. home lender. The default involves a $4.8 million mortgage issued by Calabasas, California-based Countrywide, according to property-record data collected by Discovery Bay, California-based ForeclosureRadar.
McMahon’s 7,013-square-foot (652-square-meter) home went up for sale at about $7 million in mid-2006. The price was later dropped to $5.75 million and then, two months ago, increased to $6.25 million. The boost was needed to pay what McMahon owes on the house. That sounds like a great idea….RAISE the price on a home that isn’t selling! (sarcasm intended)
The default notice was filed on March 3, according to ForeclosureRadar. Its filing was reported earlier today by the Wall Street Journal.
McMahon was the “Tonight Show” sidekick from 1962 until Carson retired in 1992, supplying both the drawn-out “Heeeere’s Johnny!” introduction and constant laughter at the host’s gags. McMahon also hosted the syndicated talent show “Star Search” and was a pitchman for the American Family Publishers sweepstakes.
McMahon isn’t the only celebrity with mortgage problems. Former baseball star Jose Canseco, who last played in the major leagues in 2001 and wrote a 2005 book revealing steroid use in the sport, also is losing his Los Angeles home to foreclosure, television show Inside Edition reported last month.
“It’s happening to anyone and everyone,” said Canseco.
Agents, you CAN help people who are facing foreclosure. You can sometimes help them to stay in their homes. As we have been saying for almost 2 years…
There has never been a time in history when so many home owners have needed the services of a caring, skilled agent. Be that agent. Learn now what it takes to thrive in this market.
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